Autonews: Chrysler, Mitsubishi plans in limbo; joint pickup coming, minivan on hold

[hemidakota]

(08:30 Aug. 05, 2004)

Chrysler, Mitsubishi plans in limbo; joint pickup coming, minivan on hold

By RICK KRANZ Automotive News

NASHVILLE, Tenn. -- The Chrysler group's tentative plans to produce a minivan and perhaps other vehicles for Mitsubishi Motors Corp. are on hold.

Discussions were interrupted after DaimlerChrysler AG's board decided in April not to invest more in financially troubled Mitsubishi. Chrysler executives are tight-lipped about their relationship with Mitsubishi, but the partnership is being scaled back.

Chrysler CEO Dieter Zetsche said discussions about providing vehicles to Mitsubishi "obviously were interrupted, and we are not back."

He did not say if they will resume. Mitsubishi has "new management, and that new management has to come to grip with a lot of things," he said at a press event here. "The first thing, of course, is to assure the basic restructuring, the financing" of the company.

But Chrysler and Mitsubishi are collaborating on a pickup for U.S. Mitsubishi dealers.

The project was locked in before DaimlerChrysler decided not to invest more in Mitsubishi.

Chrysler will start producing the pickup next year. It will be a reworked Dodge Dakota.

Also, programs to use Mitsubishi's redesigned Lancer platform for the next-generation Dodge Neon and Stratus and Chrysler Sebring and PT Cruiser will continue.

In January, Zetsche said that Chrysler and Mitsubishi were talking about sharing derivatives of a Dodge minivan and the Durango SUV with Mitsubishi dealers in the United States.

He did not rule out another vehicle if Mitsubishi's management can turn the company around. But, he said, "it is certainly more difficult for me to judge today as we have less transparency than we had."

Zetsche added that "probably it is fair to assume that the majority shareholder, Phoenix, has a somewhat different approach than we had - less long-term strategic and more short-term cash flow oriented."

Mitsubishi acquired a $4.1 billion cash bailout in May from Mitsubishi Group banks and Phoenix Capital, an investment company, reducing DaimlerChrysler's stake to about 25 percent. Phoenix has a 40 percent stake in the company.

Phoenix's investment, Zetsche said, "probably will enhance the chance short term to come back to profitability. (But) it might make it somewhat more difficult to come to decisions to do something for tomorrow's product portfolio, to invest today and take 'x' amount of time to see the returns."

Mitsubishi's financial troubles are compounded by plummeting sales and consumers' uncertainty about the company's future.

Mitsubishi's U.S. sales dropped 45.7 percent in June compared with June 2003.